Interview with Dr. Carsten Stöcker about the Fourth Industrial Revolution

As part of my coverage, I am trying to get important people within the IoT for short interviews.
Today I have the great pleasure to deliver a transliteration (translated from German) of a Skype call I had with IOTA-Foundation member Dr. Carsten Stöcker!
Before I get to the conversation a few lines about Carsten.
Carsten studied Physics (Dipl. Phys.) in Düsseldorf before he received the doctor’s degree in physics at the RWTH Aachen.
He worked for the German Aerospace Centre and for a number of international companies before he was Senior Manager at Accenture.
After that, Carsten was Head of Supply & Trading Infrastructure for RWE IT in Essen.
He changed position to Head of International Voice and Data Networks, also in Essen, before he was working in the Innovation Program Management for Innogy Consulting GmbH.
Since 2016, he’s a member of the World Economic Forum and is furthermore Senior Manager for the Innogy Innovation Hub.
Carsten is an innovative thinker with vast experience who began his career in the academic sector before he started to gain momentum in the innovation sector. There, he identified the potential of Blockchains and in particular IOTA as a possible turning point of the fourth industrial revolution.
I’m really happy to share his insight and thank Carsten for his precious time!

C. Stöcker: First of all: I have to admit, I’m a big big fan of IOTA [Laughs]. I always spread the word when I’m around other cryptographers and when I see them I ask for their opinion. I was at UC Berkeley in the valley and talked to a few guys and they found it pretty interesting from the beginning. Although they said that this idea is not really the newest because it was there before, on a theoretical level.

Limo: With the DAG?

C. Stöcker: Exactly! And there has been an old discussion before like the money is growing on trees, comparable to a potential Ponzi scheme and so on, every Blockchain had to face these allegations before. But in this case with the IOTA light node system, and the growing ecosystem overall, there is a huge potential and one important difference: IOTA is the first project where all preconceptions were cleared out right from the beginning.
One cryptographer mentioned also, that there are a few attack vectors in early stages, like Sybil attacks but the developers of IOTA found a good countermeasure to this problem with the requirement of a little computational effort when making a transaction. So all in all he believes that there can be a few vulnerabilities at the beginning but it’s quite possible to prevent them from happening. That depends solely on the size of the network which is getting bigger every day.

side note: The more nodes the tangle acquires, the bigger the hash power gets to prevent a Sybil attack from happening. A Sybil attack is based on the assumption, that half of all hash power is coming from malicious nodes. As of today already highly unlikely to happen because full nodes have been connected randomly to each other via personal node sharing. Once the tangle grows to a certain size, it’s nearly impossible to perform. The foundation established coordinator is a second mechanism to prevent the network from attacks as of today.

Limo: According to our developers, we will see (instead of the coordinator) an integration of the Monte Carlo Random Walk algorithm soon, which will be the final solution for that.

C. Stöcker: That’s right, from that moment on, everything should be fine. I would like to see more collaborations with complementary technologies, though, but I guess we will see that anyway some day. I personally think that IOTA and things like Bigchain DB could work complementary. We would be able to transfer huge amounts of IT-data into a secure Bigchain DB, transferred via Tangle. That would mean immutability, authentic, decentralized data integrity, and so on. There is a lot of potential in this field!

Limo: Indeed, a field where lots of developers are needed considering countless of proof of concepts, and lots of ideas which can become reality.

C. Stöcker: Right now, we are therefore trying to build more momentum around IOTA to attract capable developer and to increase the overall adoption in order to extend the team and the companies working with IOTA. Also with the help of the Innogy credentials.

Limo: Yes I guess we all have some pretty interesting times ahead!

As you know, I prepared a few questions, comparable to the questions I had for Per Lind. So I guess I just start!

1.) How did you get in touch with IOTA, what was the crucial factor that aroused your interest?

C. Stöcker: Mid-2016 I was reading online and found the IOTA whitepaper by chance and decided to read more about it. At first, it got my attention because I liked the naive hypothesis about the tangle. Especially if you consider my physics background where unidimensional concepts are quite boring compared to fancy multi-dimensional concepts.
You know, Bitcoin’s Blockchain is for me a one-dimensional concept whereas the tangle is multi-dimensional. So Bitcoin or Blockchains in general, cannot possibly be the answer to everything!
And the Tangle in comparison is, simplified spoken, a multidimensional construct, where countless nodes form the DAG aka. Tangle. And of course, there are more aspects to it, but the first thought of the multidimensional construct left me pretty curious.
And to be honest, it’s a pity I missed the ICO-Crowdsale! [Laughs]

Limo: Sadly, me too! [Laughs]

C. Stöcker: Well, whatever! I’m really intrigued by the IoT-technology, Blockchains, IOTA, by the light node concept and on top of that by combination with other technologies. For example, we thought about telematics on the Tangle, autonomous vehicles, blackboxes, weather stations, router, etc. and if you then combine these technologies as convergence, which is an important field, then we see it’s not only IoT, Blockchain or IOTA but peer-to-peer data storage, Bigdata, algorithms on top of that and then the fun starts where we are able to build systems which are able to unhinge all digital superstars. There is no end to our imagination! The massive scalable big-data architecture will be possible when we are more decentralized.
As a consequence, we could get rid of countless intermediaries, everyone could share their assets, it’s interoperable, direct transactions. In the end, we’re talking about the purest form of sharing-economy and that’s a good thing!

Limo: Yes, and I think we need time to be able to understand what huge impact on the world this could have, especially disruptive consequences. I could imagine that the majority will struggle to understand the outcome of this industrial revolution, and if they understand it, I’m not sure if everyone likes it! Especially the intermediaries will fight it, let alone the average Joe.

C. Stöcker: Indeed, just look at the continuing automation. Researchers came to the conclusion that almost 50% of all jobs in the US are at risk! And I don’t substitute them. If you combine the outcome, it could be far more than 50%.
That will have a massive impact on society, few will benefit, and we have to see how we can solve the issues for the rest.
Also supply chains between countries! Everything underlies a change: Do we need to ship everything over China, over Europe or can we get goods directly from the resource to its destination without detour, where full automated manufacturing units produce it autonomously?
That’s one reason we see China pressing out the juice of its people to be able to invest in new technologies.
That’s more or less a war of technologies, while we’re here in Germany are relatively naive in terms of the inevitable change. Some people even think we still have time or it won’t come to it.
Although we have all the puzzle pieces to make it happen, like IOTA, like Bigchain DB, Ethereum, we have NXP, Infineon, the leading crypto chip manufacturers. We also have the leading 3D-printer companies and a lot more key companies to change things.

“Internet 4.0” is the most important part to achieve this fourth industrial revolution. That would be a great thing if it would happen soon.

2.) What was the crucial factor, the moment that you became a member of the IOTA-foundation?

C. Stöcker: Well, I just wanted to be a part of this community! I wanted to help this important technology to make a breakthrough. I read the whitepaper and dove into its technological features, so it was kind of my decision to be a part of it!
I furthermore had a good talk with IOTA Co-Founder Dominik Schiener, who presented his previous project CargoChain on our GTEC “Blockchaincontest”. And after his successful presentation, we talked about the idea of common projects, we could start, which wasn’t that easy at first because we had to find a good topic to work on together. But as we all know it worked very well in the end.

3.) In what way can IOTA change the handling with energy grids?

C. Stöcker: Smart grids, of course, are in IOTA’s field of application but to be honest, I think the earliest changes we see are rather in the smart home area. Like multi-family houses, between neighbors where they share a few devices which will be orchestrated via Tangle or another Blockchain and as a further step, it will grow into further areas.
As a further example: weather stations. Environmental data systems can be set up really easy and I think there are lying a few use-cases.
Because an energy grid is regulated from top to toe and a critical infrastructure, lots of legacy systems etc. In Germany especially we even struggle to install smart meters in all houses. The transition is rather slow.

I personally think that the electric vehicle charging will be faster enabled. When we successfully set that up, we can think about further steps with an energy grid, like using the SCADA systems to control the loading process depending on prices, renewable energy resources, because we still have not enough of them in the energy grid.
And at this point, I can imagine that Blockchains can be a realistic, very fast solution to enable an intelligent vehicle charging system very soon.
After that, we will see new systems also in the field of smart grids etc.

Limo: Interesting. Do you think, that in addition, these new solutions can be positive for sustainability or a reduction of the energy consumption in general?

C. Stöcker: I personally think a meaningful way to support sustainability would be a crypto-crowdfunding of renewable assets. As of today, for an investor, it’s intransparent, complicated and he cannot back up once he invested. But with an autonomous decentralized organization of renewable assets, I can imagine that the value of the investment equates to the asset value. That can be easily calculated through power-purchase agreements. And then a share of renewable crypto-assets has a defined value, so we get asset-backed digital currencies, where on the opposite Bitcoin has more of an expectation value.
When eventually the renewable assets investments are freed from barriers I think the renewable systems could benefit.
And I don’t talk about some solar cell on a house but bigger community fields, which are set up for eg. one street or a bigger number of neighbors sharing these cells. It’s not very practical for single households, to built single photovoltaic cells on every single roof.
That way we can incentivize people to use, to invest into, and to build more renewable energy resources where the costs or the creation of energy can be calculated fast, easy and freed from unnecessary bureaucratic barriers. That would lead to a sharing economy and furthermore to a positive impact on the environment.

Limo: I know the following question could fill books, but nonetheless, let’s give it a try. Most of the people are limited from a technical perspective to imagine what IOTA could mean for the future, but I’m pretty sure you can.

4.) What is your personal vision of the world in 25 years?

C. Stöcker: Yes, we actually wrote something about that! It’s an exemplification of mobility. With a little bit of imagination, you can transfer that vision onto other industries.

The vision is quite simple. Our gross national product will be dominated by a machine economy. And this machine economy consists of machines that make transactions to each other if values need to be shifted. Machines will be their own customers. That is not a new idea: Cyber-physical systems. After that term came up, they decided to form the term “Industry 4.0”.
So we think that these cyber-physical systems can create a complete value-chain, an autonomous billing system where these machines account for the majority of the GNP.
As a result, we can think about the impact on society and about a universal basic income model and how we can employ people.
And all these thoughts and systems are at the tipping point!
So a combination of Blockchains, automation technologies, like drones, artificial intelligence, autonomous driving.
Again, everything is at the tipping point!
That’s insane. In 25 years, it will change the developed societies vastly.
And we don’t know what happens to developing countries yet. Maybe the income gap grows bigger and the problems with it.
Furthermore the so-called Zero Margin Economy, many businesses won’t be economically feasible anymore and from that perspective, it could be a total economic disaster!
What we need is a solid solution for this kind of problems.

Limo: We can expect a big transformation! Especially the universal basic income is already discussed a lot. Maybe it’s really necessary to compensate for the automation.

C. Stöcker: Yes, I’m pretty open minded for that. I’m in contact with the government to discuss a machine-taxation-system, to create a basis for such a system. You could define smart contracts that enable an automatic taxation to the fiscal authorities. This system would be very beneficial and that’s the reason we are trying to discuss them.
So all in all, it is safe to say that everything will be automated. Needless to say: IOTA fits perfectly!

Limo: We are looking forward seeing the tech in action and of course in 25 years, we’re still here!

Carsten, thank you for your precious time and good luck with all your plans!
side-note: In the meantime, Carsten published an article of the mentioned collaboration between Innogy and IOTA. You can find it here

@TechCrunch Would love that for the cryptospace, together with a standard they had to accept like using primary sources, commentaries have to be marked as such and conflicts of interests should be marked at the beginning of an article. Crypto desperately needs a standard. #iota #btc #eth